In vivo studies show that the SENCAR mouse is unusually sensitive to skin carcinogenesis by initiation and promotion while the BALB/c mouse is resistant. We have developed a technique of grafting epidermal and dermal cells to athymic nude mice to form a reconstituted skin. Initiated cell lines 308 and SP-1, derived from initiated skin of BALB/c and SENCAR mice, respectively, have been developed and characterized. These lines form benign squamous papillomas in grafts and have an activated ras oncogene. We can thus reconstruct an "initiated" skin using mixtures of papilloma- forming cells with primary epidermal cells and dermal fibroblasts. Suppression of papilloma size occurs when normal SENCAR primary epidermal cells are grafted along with small numbers of SP-1 cells. This suppression is specific for SENCAR primary epidermal cells and does not occur with SENCAR primary dermal fibroblasts, BALB/c primary epidermal cells, or an initiated cell line derived from SENCAR skin which makes an apparently normal skin when grafted. BALB/c primary epidermal cells fail to suppress papilloma formation either from grafted SP-1 cells or the BALB/c-derived 308 cells. Papillomas formed on SENCAR mice by treatment with promoter alone. i.e., without exogenous chemical initiation, did not have an activated ras oncogene at codon 61. These papillomas presumably resulted from endogenously initiated cells. Cell lines being developed from these papillomas will presumably be useful in identifying the molecular lesions in endogenously initiated cells.